Stock Market general term to describe all stock transactions

Stock Market •general term to describe all stock transactions

Stock•share of ownership in the assets and earnings of a company

Bond•type of debt that a company issues to investors for a specified amount of time

How to make a profit• Investors that purchase stock earn money from increases in the stock’s value and/or dividends.

Diversified Portfolio•Money is invested in a variety of investment tools to decrease risk

Common Stock•Most popular type of stock•Owners get voting rights

Dividends•distribution of earnings a corporation pays to stockholders

Preferred Stock•Pays a fixed dividend•have precedence over common stock•Less risk

7 Stock ClassificationsGrowth

• have a consistent record of relatively rapid growth and earnings in all economic conditions

Income• pay higher than

average dividends because the company chooses to retain only a small portion of its profits

7 Stock ClassificationsValue

• from companies which have a low market price considering their historical earning records and value of current assets

Countercyclical• from companies

which give consistent returns even when the economy is suffering because their products are always in demand

7 Stock ClassificationsCyclical

• are greatly influenced by changes in the economic business cycle

• mirrors the economy

Speculative• from companies

with potential for substantial earnings in the future

• high risk/high reward

7 Stock ClassificationsBlue Chip

• from nationally recognized companies which dominate the industry often having annual revenue of $1 billion or more

Types of MarketsBear Market•Market is

doing well• Up 20%• Lasts on avg

29 months

Bull Market•Market is

doing poor• Down 20%• Lasts on avg 9

months

How Stocks Are Traded1.Receiving an order2.Signal to floor broker3.Trade occurs4.To the ticker system5.On the board